From humble beginnings AWH became major power player

Australian Water Holdings didn't start out as a company with aspirations of becoming an infrastructure player valued in the hundreds of millions of dollars.

The Rouse Hill Infrastructure Consortium, as it was then known, was established as a non-profit-making entity in 1992 with a far more humble aim: to provide water pipes and sewerage to the 15,000 undeveloped acres that would become Sydney's north-west suburbs.

All that changed when Nick Di Girolamo joined AWH as a director in 2005. For a small company of just 10 employees, Mr Di Girolamo had grand plans - and not only for his own pay packet. The Independent Commission Against Corruption has heard how he paid himself an ''absurdly high'' salary of $1.5 million, charged back to Sydney Water, and transformed the company, quietly, from a non-profit organisation into a profit-driven company.

As AWH continued to lay pipes and water treatment facilities, Mr Di Girolamo's main aim became convincing the state government to transform AWH's contract with Sydney Water into a public-private partnership potentially worth billions of dollars.

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Expert advice in 2009 had shown him the market value of AWH would rise fivefold from $47 million to $246 million by 2013 if the company could get the state government on board with a PPP.

The company believed its contract with Sydney Water gave it exclusive rights to develop water in the north-west growth centre and prevented any competitive tender for its work. Sydney Water chief executive, Kerry Schott, had legal advice that showed no such rights were held by AWH.

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Fairfax Media understands, from 2008 onwards, she told Labor water ministers Nathan Rees and Phil Costa that Sydney Water was on solid ground and the government did not need to cave in to lobbying by Mr Di Girolamo and AWH.

Despite the best efforts of Eddie Obeid, outlined by ICAC, Mr Rees and Mr Costa never gave AWH what it wanted.

But a coming change in the political landscape only enhanced the company's efforts. ''From 2010 Mr Di Girolamo pursued the leader of the opposition, Barry O'Farrell, relentlessly,'' said Geoffrey Watson SC, counsel assisting ICAC.

Donations to the Liberal Party flowed and he called in other high-powered Liberals to help. Arthur Sinodinos, a director since 2008, became chairman and his fellow Liberal powerbrokers Michael Photios and Paul Nicolaou also got involved as lobbyists. There was a potential $1 million pay day for Mr Photios if a PPP went ahead.

ICAC has heard that Mr O'Farrell and his former finance minister did nothing wrong and left Sydney Water to deal with AWH.

At the same time, the state government was driving change at Sydney Water. Former finance minister Greg Pearce announced the departure of Ms Schott in May 2011. He then appointed Liberal donor Bruce Morgan and Richard Fisher.

In September 2011, Mr Sinodinos wrote to Sydney Water chairman Tom Parry - copying in Mr O'Farrell and Mr Pearce - in which he proposed further mediation and a meeting between Mr Di Girolamo and Sydney Water managing director Kevin Young.

Two sources have told Fairfax the Sydney Water board became more accommodating towards AWH in the second half of 2011.

Nonetheless, a PPP never eventuated.

But in January 2012, Sydney Water entered a new 25-year exclusive agreement to give AWH the sole right to project manage the remaining $500 million of water infrastructure in the north-west growth centre.